Oil prices dip but are still poised for weekly gain

Oil prices dipped on Friday but were poised to register a weekly gain, with renewed optimism on China's demand recovery outweighing worries over recession, growing U.S. crude inventories and tightening monetary policy in Europe.

Brent crude futures slipped by 51 cents, or 0.6%, to $84.24 a barrel by 1207 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 41 cents, or 0.5%, at $77.75.

Brent has risen about 1.3% this week while WTI is heading for a gain of 1.9%.

"Those betting on higher oil prices are basking in the afterglow of the positive macro data out of China," said PVM analyst Stephen Brennock.

In China, activity in the services sector expanded at the fastest pace in six months in February as the removal of tough COVID-19 restrictions revived demand, a private sector survey showed on Friday.

Manufacturing activity in China also grew last month, at the fastest pace in more than a decade, reinforcing expectations of a fuel demand recovery. China's seaborne imports of Russian oil are set to hit a record high this month.

The world's top oil importer is becoming increasingly ambitious with its 2023 growth target, aiming as high as 6%, sources involved in policy discussions told Reuters this week.

The market broadly shrugged off a 10th consecutive week of crude stock builds in the United States, as record exports of U.S. crude kept the increase smaller than in recent weeks.

Russia's plan to deepen oil export cuts in March also helped to buoy prices.

Meanwhile, analysts polled by Reuters expect the dollar to weaken in the next 12 months, which would make dollar-denominated oil cheaper for holders of other currencies.

On the central bank front, hawkish signals continue to emanate from the European Central Bank, with Governing Council member Pierre Wunsch saying its key interest rate could climb as high as 4% if underlying inflation remains high.